Television and video streaming website Netflix (NASDAQ: NFLX) has come a long way since it was founded in 1997. The company is on its way to becoming a network in its own right with a slate of exclusive new, original content rolling out in the next year in addition to its already huge and diverse portfolio.
One of Netflix’s new shows, The Unbreakable Kimmy Schmidt, was originally slated to premier on NBC in the mid fall season. However, Netflix announced last Friday that it acquired the series created by popular Saturday Night Live alumna Tina Fey and doubled its order from one season to two seasons. This is the fifth big series pickup that Netflix has made in the past two weeks.
However, Netflix has recently become the center of controversy as the company announced it is suing its former Vice President of IT Operations, Mike Kail, for suspicions of fraud. Mr. Kail allegedly collected kickbacks between 12% and 15% from vendors that connected with the service during his time working at Netflix.
Netflix’s lawsuit claims that the company suspects Kail of accepting payments from other companies that worked with Netflix during his tenure. Netflix believes “such benefits may have included, among other things, stock and/or gift cards.”
Despite this set back, Netflix has continued to expand internationally, with plans to become available in Australia and New Zealand in March 2015.
On November 25th, Citigroup analyst Mark May maintained a Neutral rating on Netflix with a $364 price target, advising investors to “stay on the sidelines.” May wrote, “Our analysis of search data suggests that the newer international markets are experiencing a faster deceleration than earlier markets. As such, at this point we do not expect upside to fourth quarter estimates.”
May currently has a 64% success rate recommending stocks with a +13.7% average return per recommendation.
Similarly, Stifel Nicolaus analyst Scott Devitt downgraded his rating for Netflix from Buy to Hold on November 25th with a $380 price target. The analysts pointed out that the reaction to Netflix’s third quarter earnings report from investors signifies that investors are more interested in the company’s subscriber growth. Devitt predicted that the subscriber growth in the United States will continue to increase, but at a slower pace than in the past before Netflix’s international growth can pay off. However, the analyst thinks the company’s long term outlook remains attractive.
Devitt has a 58% success rate recommending stocks with a +16.6% average return.
On average the top analyst consensus for Netflix is Hold.